The question relates to a historical event involving the Montagu-Chelmsford Report and the subsequent reaction of Congress leaders in India.

Option 1: The Swarajya Party was a faction within the Indian National Congress that arose following dissatisfaction with the non-cooperation movement, not the Montagu-Chelmsford Report.

Option 2: The Indian Freedom Party is not widely recognized as a political group that formed as a result of disagreement over the Montagu-Chelmsford Report.

Option 3: The Independence Federation of India does not appear to have been a group that was formed as a direct response to the Montagu-Chelmsford Report.

Option 4: The Indian Liberal Federation was the correct answer because this party was formed by Indian moderates who believed in constitutional methods for the struggle for independence. They left the Indian National Congress after condemning the Montagu-Chelmsford Report because this report called for constitutional reforms in India which was against the extremist view in the Congress. Hence, the moderates, who were in favor of such reforms, left Congress to form the Indian Liberal Federation.